NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Investing in Stocks (NISM XXI-A)
An investor buys a share at ₹800, receives a dividend of ₹24 during the year and sells it at ₹880 at year end. What is the total holding period return?
The holding period return is 13%. The investor earns a capital gain of ₹80 plus a dividend of ₹24, totalling ₹104 on an investment of ₹800. Leaving out the dividend would understate the return at 10%.
- A10%
- B3%
- C13%Correct
- D8%
Explanation
Capital gain = 880 - 800 = ₹80; dividend = ₹24; total = ₹104. Return = 104 / 800 = 13%. Ignoring the dividend gives 10%, ignoring the capital gain gives 3%.
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